"But it’s not often remarked that ordinary Americans have already — and for years — been buying vast amounts of complex exposure to private equity risk. "They’ve just been doing so (without realising it) through their boring old life cover and fixed annuities."

"All in all, 'democratising' access to private credit may undermine the very features that have sustained its growth."

The next must-have accessory for crypto and tech bros is far less sexy than a Lamborghini — it’s a banking license. But Circle, Erebor, Ripple and others will be too tied to hyper-volatile sectors, just like Silicon Valley Bank in 2023. Via @opinion.bloomberg.com www.bloomberg.com/opinion/arti...

Smart insights in here from @stevenkelly49.bsky.social who co-authored a great working paper this year on the 2023 mini-crisis. For a quick, deeper dive into that, i'd recommend his pod interview with @marcruby.bsky.social [subscription req'd] > www.netinterest.co/p/silicon-va...

A guest spot over at Odd Lots: "When Should We Care About Unrealized Bank Losses?"

"Yale Program on Financial Stability Presents Financial Crisis-Fighting Playbook"

JPM’s Naveen Mallela: “From an institutional standpoint, deposit tokens are a superior alternative to stablecoins. Because they are based on fractional banking, we think it is more scalable.”

Smart, interesting stuff here from @stevenkelly49.bsky.social on stable coins and links with money markets/bills. (The quote below is a digression but a v important one IMO!) open.substack.com/pub/withoutw...

New, short note: "The Financial Stability Implications of Each Possible Stablecoin Reserves Model"

"Ad Hoc Emergency Liquidity Assistance in the 21st Century: Necessary, but Never Sufficient" Our recent paper (w/ Vincient Arnold, Greg Feldberg, and Andrew Metrick) is now out as a policy brief with the European Money & Finance Forum: www.suerf.org/publications...

Bank CFOs describing the Great Bank Re-Tranche phenomenon perfectly:

Expanding financing has allowed banks to benefit from these trends The pivot reflects a broader industry trend that ppl like @stevenkelly49.bsky.social + Huw van Steenis have dubbed the "re-tranching" of the banking system post 2008 This has seen banks act more as financiers than investors

NEW: How Goldman Sachs turned financing into a $9bn powerhouse Goldman's financing revenues now outstrip investment banking fees after >doubling since 2020 Profile of how the age-old business of lending money is transforming the investment bank 🧵 www.ifre.com/topic-codes/...

Episode # 10000000 of “There’s a reason we have banks and structure them the way we do”

A new FDIC disclosure shows the text of its 2023 "systemic risk exception" board resolution to rescue the SVB/Signature uninsured depositors. As noted below, the resolution included First Republic, which wasn't ultimately closed for another 6 weeks:

Bloomberg "suffered widespread disruption on Wednesday morning that prevented traders from accessing live pricing and pushed back UK and EU sovereign debt auctions."

"What Has Changed Since Silicon Valley Bank Collapsed? Not Much."

Brazil's central bank (BCB) has announced swap agreement w/ the PBoC. But, not to lose any friends, the press release specifically mentions also having access to the Fed's FIMA facility, "which allows the BCB to access US dollars through a repo operation." Translated:

Credit Suisse was a bank from which a thousand case studies will bloom. Now out in the Journal of Financial Crises—with Jack French and Owen Heaphy—we take a look at the Swiss government's emergency liquidity assistance, which Credit Suisse drew on for over $180 billion:

There are three certainties in life: death, taxes, and Credit Suisse somehow avoiding both

“The secondary market will hit record levels this year with deal volume in the range of $162 billion to $182 billion as private markets continue to expand and LPs look for liquidity, according to Evercore Inc. That’s expected to lure increased capital…”

Trump's tariff and Powell attack retreats have calmed markets, but if things go off the rails again, here's what a range of experts believe will be the central bank toolkit to tame disorderly markets.

The IMF Global Financial Stability Report on the importance of the dollar swap lines, specifically for Europe:

Great to hop on the UBS podcast to discuss "the state of financial stability." Lots on the usual suspects: Treasury market, private credit, etc. Also, why I don't think the weakening of the dollar represents a changing of the "flight to safety" order (yet, at least):

New paper: "Ad Hoc Emergency Liquidity Programs in the 21st Century" w/ Vincient Arnold, Greg Feldberg, & Andrew Metrick How do policymakers design emergency rescue loans? And how should they? We survey 22 high-profile, modern emergency loan cases: elischolar.library.yale.edu/journal-of-f...

Less-known of the SVB & Signature rescue weekend, policymakers had prepared a bridge bank and invoked the "systemic risk exception" for First Republic too. But First Republic stayed open & soon got $30bn from other banks. New case study on that rescue w/ Salil Gupta & Jack French:

The government (in)famously did not provide a rescue loan to Lehman. The Fed did, however, lend substantially to the firm dealer subsidiary. @ayogeorge.bsky.social & I have a new case study on this intervention, which also squares that apparent inconsistency. In the Journal of Financial Crises:

“Tether’s CEO says his $144 billion stablecoin is good for the U.S. dollar. Is he right?”

The Fed released 2023-Q1 discount window data today. All the largest borrowers (pictured) were the crypto/VC banks highlighted in the paper below: SVB, Signature, First Republic, PacWest, & Western Alliance. One additional bank sneaks in at the bottom: Customers Bank—another crypto bank.

Selling shovels in a gold rush. US Banks Finance Their Own Competition to Tune of $1 Trillion

Thanks to the 1050 Bascom students/staff for having me back on our @uwpolisci.bsky.social podcast. We started with tariffs & the Trump economy, but also ranged across topics including 🇺🇸 power, transatlantic relations, Musk/DOGE & our ongoing collapse into competitive authoritarianism, &...pirates.

Systemic ‘Bank Run’ Risk Hangs Over Stablecoin Bills in Congress

European officials beginning to wargame what it would look like if the Fed pulled their swaps under political pressure. The Fed got the State Dept's OK for each of its swap lines in 2008, particularly important for EM ones. Unclear tho if it'd pull one of the standing ones from Europe, Japan, etc.

Thought-provoking! "Rushing to Judgment and the Banking Crisis of 2023" by Steven Kelly and Jonathan Rose. "This article critically reviews the 2023 banking crisis with the benefit of two years of hindsight." www.chicagofed.org/publications...

You can see why "regional banks," the midsize banks scattered across the country, took umbrage at those who took to calling 2023 the "Regional Bank Crisis":

Our details here on the failures of Signature Bank and Silvergate Bank can also hopefully put the “debanking” debate into some more context. Have a look:

New paper: "Rushing to Judgement and the Banking Crisis of 2023" At the two-year anniversary of the crisis, Jonathan Rose and I present 7 facts that are overlooked in the standard account of the crisis: www.chicagofed.org/publications...

First review of Private Finance, Public Power by @stevenkelly49.bsky.social ! Check it out and preorder now!

In American Banker, I review (spoiler alert: positively) @petercontibrown.bsky.social and @seanvanatta.bsky.social's forthcoming book on the history of bank supervision in America:

Rather than a blanket requirement for pre-positioning collateral, the ECB's @isabelschnabel.bsky.social says: How about you banks at least give us whatever collateral is gathering dust on your balance sheet anyways —

Unrealized losses on banks' securities holdings bounced back up to $482 billion as of end-2024.

Elon Musk and DOGE want to slash the powers and personnel of financial watchdogs, but whatever they do they should ignore the #Project2025 sirens and just leave deposit insurance alone @opinion.bloomberg.com www.bloomberg.com/opinion/arti...

If VCs and crypto were the focus of political debanking, how come all those uninsured depositors and USDC got bailed out when SVB went down? Good stuff from @stevenkelly49.bsky.social open.substack.com/pub/withoutw...

New note: “Where Debanking Didn't Happen”

It seems that Circle has removed from its website the blogs it put out when its USDC stablecoin lost its dollar peg because it had $3.3 billion of reserves stuck in SVB—& was banking with the also-failed Silvergate and Signature. On the left is the web archive, with the right being right now:

Figure Markets "has launched the first interest-bearing stablecoin native to a public blockchain, registered with the Securities and Exchange Commission." The stablecoin will pay SOFR minus 50 bps. www.prnewswire.com/news-release...